debenture

Definition

A fancy IOU from a corporation that's basically backed by nothing more than a firm handshake and the company's stellar reputation. Unlike bonds secured by actual assets, debentures rely solely on the issuer's creditworthiness—think of it as lending money to your successful friend who promises they're good for it, except your friend is a Fortune 500 company. If they go belly-up, you're just another creditor in a very long line.

Example Usage

The CFO decided to issue debentures rather than secured bonds, banking on the company's pristine credit rating to attract investors without pledging any collateral.

Source: Standard financial terminology

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